Modern Growth Theories

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Modern Growth Theories

Tutorials 2

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• An introduction to modern economic growth

• Measures

of

economic

growth

and

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GDP (constant 2010 US$), 2000-2017

Source: https://data.worldbank.org 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000

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GDP (constant 2010 US$), 2000-2017

Source: https://data.worldbank.org 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000

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GDP (constant 2010 US$), 2008-2017

Source: https://data.worldbank.org 0 500 1000 1500 2000 2500 3000 3500 4000 4500 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

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Economic Growth and Development

• Economic growth is the increase in the amount of the

goods and services produced by an economy over time.

• It implies only an increase in quantitative output.

• Economic development is the increase in the standard

of living in a nation's population with sustained growth

from a simple, low-income economy to a modern,

high-income economy.

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Economic Growth – Measures of Economic Growth

Simon Kuznets (1901-1985)

1971- Nobel Memorial Prize in Economic Sciences

• National Income and Its Composition, 1919–1938 – published in 1941

• Gross National Product (GNP) is

the market value of all goods and services produced in one year by labour and property supplied by the residents of a country.

• Gross Domestic Product (GDP) is

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SNA vs MPS

• The System of National Accounts (SNA) is the

internationally agreed standard set of recommendations

on how to compile measures of economic activity.

• The Material Product System (MPS) was used in

countries with centrally planned economies as a tool for

analyzing economic processes at the macro level.

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Growth Rate and Welfare

Years Country A Country B Country C

1% 5% 10%

0 100 100 100

10 110.46 162.89 259.37

30 134.78 432.19 1744.94

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GDP per capita and Population (World Total)

Source: Statistics on World Population, GDP and Per Capita GDP, 1-2006 AD, October 2008 (www.ggdc.net/maddison)

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The Growth of the World Population and Some Major Events in the History of Technology

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The fastest growing countries The slowest growing countries

Country GDP p.c. growth

2008-2017 Country

GDP p.c. growth 2008-2017

Nauru 12.5% -7.4% South Sudan

China 7.7% -5.5% Yemen, Rep.

Turkmenistan 7.7% -4.6% Equatorial Guinea

Ethiopia 7.3% -4.6% Libya

Myanmar 7.0% -3.8% Kuwait

Lao PDR 6.2% -3.1% Timor-Leste

Uzbekistan 5.9% -2.6% Greece

India 5.7% -2.6% Central African

Republic

Mongolia 5.2% -1.7% Bermuda

Bangladesh 5.1% -1.6% Brunei

Darussalam

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The fastest growing countries The slowest growing countries

Country GDP growth

2008-2017 Country

GDP growth 2008-2017

Nauru 16.0% South Sudan -5.9%

Ethiopia 10.1% Libya -4.0%

Turkmenistan 9.5% Yemen, Rep. -3.0%

China 8.3% Greece -2.9%

Qatar 8.1% Central African

Republic -1.7%

Myanmar 7.9% Bermuda -1.7%

Uzbekistan 7.9% Ukraine -1.6%

Lao PDR 7.7% Timor-Leste -1.2%

Rwanda 7.4% Puerto Rico -1.1%

Mongolia 7.1% Italy -0.6%

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GDP

• https://data.worldbank.org/indicator

• Exports of goods and services (constant 2010 US$) • Imports of goods and services (constant 2010 US$) • Gross capital formation (constant 2010 US$)

• General government final consumption expenditure (constant 2010 US$) • Households and NPISHs Final consumption expenditure (constant 2010

US$)

• Households and NPISHs Final consumption expenditure (constant 2010 US$) modified

• GDP (constant 2010 US$) • GDP growth (annual %)

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